Digital First Media adopts online subscription model

Digital First Media, the second-largest newspaper company in the United States, is adopting an all-access subscription model.

CEO John Paton announced the transition in a blog post Monday. “We need more gas in the tank if we are going to complete this journey of print-to-digital transformation,” he wrote.

The Pioneer Press in St. Paul, Minn. will become the first Digital First property to transition to the new model this week. With the exception of The Salt Lake Tribune, the remainder of the chain’s 75 daily newspapers will roll out subscription packages through January 2014.

The all-access metered model will allow non-subscribers a set number of free articles per month. Subscribers will receive access to print, digital and mobile content.

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Previously, content on most Digital First sites was available free. Individual papers within the company had experimented with paywalls and other revenue generators, such as asking consumers to fill out surveys before accessing content, but neither approach had the desired results.

Paton has been a vocal critic of paywalls in the past, calling them “a stack of pennies” in an industry swapping print dollars for digital dimes. He said he still doesn’t think subscription models hold all of the answers to the news industry’s financial woes.

“I do think long-term they can restrict audience growth, and that’s something we’ll have to be careful about,” he said in an interview. Still, he sees them as “a good, strong business initiative” in the short-term.

Paton said one of the reasons he held out for so long was that paywalls seemed too easy a solution to the digital media problem and one that could stymie innovation.

Digital First Media is among the last of the major U.S. newspaper companies to shift to a subscription strategy. Gannett Co., the largest local news chain in the country, already has implemented a subscription model at all of its newspapers except for USA Today.

“Paywalls are becoming the default for American newspapers,“ said Ken Doctor, a consultant whose work focuses on the transformation of the consumer media industry.

Publishers find paywalls allow them to increase prices for print consumers, providing a revenue bump without significantly cutting subscription volume. “If you execute well, you can usually keep 85 percent plus of those readers in that new program and get a bump in new revenue,” Doctor said.

About 40 percent of American newspapers will require some type of payment for online content when the Digital First Media transition is complete, Doctor said.

Though he did hold out longer than many of his peers, Paton said the power of subscription models can be hard to deny. “There are widgets to be sold, so I’m going to go sell them,” he said.